Questions and Answers
A domicile is the place at which an individual maintains his/ her permanent abode and to which he/she intends to return whenever absent. A person may only have one domicile at any one time.
An abode is a house, apartment, or other building maintained as a dwelling place. An abode is permanent if it is maintained as a dwelling place for an indefinite period of time, whether the occupants own it or not. An abode that is occupied only during a fixed or limited period of time for a particular purpose is not a permanent abode.
Barracks, bachelor officer's quarters, quarters on ships and other living accommodations provided by an employer for a definite period do not qualify as permanent abodes. Further, college dormitories, fraternity houses, sorority houses and off-campus rentals by students enrolled in college or universities do not qualify as permanent abodes.
The domicile of an individual who maintains more than one permanent abode is determined by two factors: (1) Which is the one place where the individual has had the greatest connections for the taxable year; and (2) Which place does the individual intend to be his/her domicile?
For example, a locality with the greatest connections is where a person:
- spends the greatest amount of time
- supports a spouse and children
- purchases the necessities of life
- has doctors, lawyers, and accountants
- houses pets
- has active banking accounts
- worships regularly
- participates in social, fraternal, or athletic organizations
- has works of art, furniture, family portraits or heirlooms
- fulfills local tax obligations
- is employed
- owns real estate fit for year-round living
- maintains a driver's license and vehicle registration
- maintains professional licenses
- maintains union membership
- declares residency for hunting or fishing licenses, income tax returns or school tuition
- conducts business
- receives mail
- receives unemployment compensation
- records his or her address for insurance policies, deeds, mortgages, leases, passport, federal and local tax returns, etc.
- was domiciled at birth
- maintains safe deposit boxes
- owns a cemetery plot
- claims a homestead exemption
- is listed in the telephone directory
- obtains homestead exemption
- gathers for family and social events
- maintains TV and Internet connections
- registers to vote
A statutory residence is the place where an individual spends the most time during the year. More specialized definitions, however, apply when the person does not maintain a permanent place of residence in PA or has frequent or prolonged absences from his/her place of residence. A person is considered a statutory resident of PA unless:
- the person spends more than 181 days (midnight to midnight) of the tax year outside PA; or
- the person has no permanent abode in PA for any part of the tax year.
A person can have only one domicile at a time, and it does not change until they move to another state or country with the intention of making a new permanent home there, abandoning the previous domicile.
If a person moves to another state or country but intends to stay there only for a fixed or limited time (no matter how long), domicile does not change. Domicile is not dependent upon continuous physical presence. It is not abandoned by absence there or by presence in a former domicile, so long as there is not firm, sincere, unconditional intention of remaining in the other jurisdiction for an indefinite and uncertain period.
For example, PA domicile does not change when a person is temporarily absent – to return to a former domicile for business, health, pleasure, or education – with intention to return to the PA domicile.
To establish a new domicile, a taxpayer must:
- Show evidence of definite intention to discontinue making the former domicile the primary base of operations;
- Show evidence of definite intention to make the new domicile the primary base of operations; and
- Show evidence of physical presence and abode (transient, temporary, or permanent) in the new location.
A person may have only one state of domicile at any given time, and state of domicile does not change until someone moves to another state or country with the intention of making a new permanent home there, abandoning the previous domicile.
To determine which location is your domicile, review the bulleted list of activities previously identified in this brochure to determine the location with the greatest connection. Then determine if you have taken the necessary steps to establish a new domicile outside PA, considering the three requirements identified in the previous question.
Unless there is an intention to change domicile, a person generally does not acquire a new domicile or lose the domicile maintained before entering the armed forces. However, a person in the armed services or foreign service, as well as his/her spouse and family, may establish a new domicile wherever he/she or his/her family is stationed. In order to change domicile, the service member and/or family must intend to establish a new domicile as discussed in the How do I establish a new domicile? section. Someone living in a foreign country for something other than a temporary or transitory purpose is treated as a domiciliary of that country if the person:
- Is not an employee of the U.S., its agencies, or instrumentalities (including the armed forces and U.S. foreign service); and
- Does not hold an appointive office in the executive branch of the U.S. government.
An individual who is domiciled in PA and who also maintains a permanent abode in a foreign country is considered a nonresident of PA for income tax purposes if the person meets all three of the following requirements:
- The individual is absent from PA for more than 335 complete calendar days of the tax year;
- The individual maintains a permanent place of abode elsewhere during the entire tax year; and
- The individual maintains no permanent place of abode in PA at any time during the tax year.
The Military Spouses Residency Relief Act (MSRRA), which was signed into federal law on Nov. 11, 2009, permits a service member’s nonmilitary spouse to retain status as an out-of- state resident and source any nonmilitary compensation to the state of residence under the following circumstances:
- The service member must be in PA in compliance with military orders;
- The service member’s spouse must be in PA solely to be with his/her spouse; and
- The service member’s spouse must have the same domicile (legal residence) as the service member.
For detailed information on how MSRRA impacts state taxation of income earned by a service member’s nonmilitary spouse, review the comprehensive personal income tax Tax Bulletin 2010-01 on the department’s website, www.revenue.pa.gov.
For more information of taxation of military pay, please visit the Military Pay page.
Generally, children have the same domiciles as their parents or legal custodians. If the parents are separated, the child’s domicile is the domicile in which the child lives or that of child’s legal custodian. Becoming an adult does not by itself separate a child from a parent’s or legal custodian's domicile. The child merely acquires the power to establish a separate or new domicile.
College dormitories, fraternity houses, sorority houses and off-campus rentals by students enrolled in college or universities do not qualify as permanent abodes.
PA taxes nonresidents on the following income from PA sources:
Compensation for services performed in PA, unless the nonresident is a resident of Indiana, Maryland, New Jersey, Ohio, Virginia, or West Virginia. If you are a resident of one of these states, your PA employer should withhold and remit tax to that state.
- Net income (loss) from the operation of a business, profession, or farm in PA. If you derive income from sources inside and outside PA, you should maintain separate accounts and records that clearly reflect your PA business activity. Otherwise, you must file a PA Schedule NRH to apportion your income.
- Net income (loss) from the sale, exchange, or disposition of property in PA. If you sell property in your former state before moving into PA, you are not subject to PA income tax on the gain. However, if you moved from PA to another state and then sell tangible property in PA, you must report the gain. You may qualify for an exclusion from paying tax on the gain on the sale of your principal residence in PA.
- Net income (loss) from rents, royalties, patents, and copyrights in PA or used in PA.
- Estate or trust income, only to the extent the beneficiary’s PA-source income is taxable to nonresidents.
- Gambling and lottery winnings from PA sources except prizes from the PA Lottery.
PA does not tax nonresidents on ordinary interest and dividend income, even from financial institutions and corporations located in PA. PA does not tax nonresidents on the gain (or loss) realized from the sale, exchange, or disposition of intangible property.
A person who moves into or out of PA with the intention of acquiring a new domicile is considered a part-year resident for the part of the tax year the individual maintains a permanent place of abode in PA.
There are two exceptions to this general rule:
- An individual is considered a nonresident rather than a part-year resident if that person spent less than 31 days of the year in PA, maintained a permanent place of abode outside PA during the entire tax year and maintained no permanent place of abode in PA at any time during the tax year.
- An individual is considered a resident rather than a part- year resident if that person was physically present in PA for at least 183 days or more and maintained a permanent place of abode in PA at any time during the tax year.
Part-year residents are subject to PA tax on all income earned, received, or credited for the part of the year they were a resident of PA, as well as on all income earned, received, or credited from PA sources for the part of the year they were nonresidents.
Part-year residents of PA must file PA personal income tax returns, filling in the oval for a part-year return and recording the time they were residents. Part-year residents are not subject to PA tax on ordinary interest, dividends, and gains on intangible property while nonresidents.
PA has reciprocal tax agreements with Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. Under these agreements, one state will not tax a resident of the other state on compensation subject to employer withholding. These agreements apply to most W-2 compensation earned while a taxpayer is a resident of one of these states. Such agreements do not apply to miscellaneous and non-employee compensation; compensation earned while a PA resident and received while a resident of the reciprocal compensation agreement state; or compensation paid to Ohio-resident shareholder-employees who worked or performed services in PA and have 20 percent or greater interest in a PA S corporation.
For PA residents who work in reciprocal agreement states, PA taxes compensation, not the reciprocal state. It is the taxpayer’s responsibility to notify the employer of PA residency, and the employer should withhold PA tax from pay, not income tax of the reciprocal state.
If an out-of-state employer does not withhold PA tax, the taxpayer must report compensation as taxable income to PA and pay the tax. The taxpayer must make PA estimated payments if compensation not subject to withholding by a PA employer is more than the following:
| TAXABLE YEAR | DOLLAR AMOUNT |
|---|---|
| 2023 and prior | $8,000 |
| 2024 | 9,500 |
| 2025 | 11,000 |
| 2026 | 14,000 |
| 2027 | 17,000 |
| 2028 | 20,000 |
PA residents who are also residents of reciprocal states for income tax purposes are subject to special rules. A PA resident credit may be claimed only if each of the following applies:
- The income on which the reciprocal state’s tax is imposed is not only subject to tax in the same taxable year by PA, but also taxable under the reciprocal state’s laws regardless of residence or domicile; and
- The taxpayer is not entitled to claim any credit for PA tax against the reciprocal state’s tax.
To claim the PA resident credit, a taxpayer must file PA Schedules G-L and include a copy of the tax return filed with the other state. The copy of the other state’s return shows the other state taxed the person as a resident, and no credit was claimed for the PA tax paid to that state.